Kidder Peabody

In: Business and Management

Submitted By nicio84
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Pages 4
KIDDER PEABODY GROUP

In the last years the financial market has been hit by many financial scandal the most recent in 2000s are Enron and Parmalat which has affected the entire market. This paper is going to take in consideration an old scandal the Kidder Peabody Group that first has been implicated in insider trading and later in a complicated method for which losses counted as huge profit.
In specific this paper will analyze the case study of Kidder Peabody Group starting with brief overview of the company, then analyze the motivations and synergies that GE and Kidder Peabody should have got and finally it will explain the strategy that the bond department especially Joseph Jett used to falsify the books.

The company was founded in 1865 in Boston by Henry Kidder, Francis Peabody and his brother Oliver. The company grew between the end of the 19th and begin of the 20th century where it became a leading bank in New England and a major player in the US financial market. In fact it opened an office in Wall Street, New York. The firm’s headquarter stayed in Boston until the Wall Street crash in 1929 where Kidder had to face some financial difficulties. Here thanks to some investors that injected the necessary capital recue Kidder Peabody and Chandler Hovey, Edwin Webster, and Albert Gordon became the new partner. The firm survived the difficult 30s and got back its leading position among the most important investment bank after the end of World War II.
In 1985 Kidder Peabody was ranked 15th in the major investment bank with $363 million in capital. Unlike many of its competitors, the firm had funded its growth through accumulated profits which limited its growth opportunities. Competitors were bolstering their capital by issuing shares to the public (e.g., Morgan Stanley), or were being acquired by large corporations (e.g., Salomon Brothers). Finally, in early…...

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